Let's talk about what a balanced market is vs. an average market and of course price reductions.
I seem to be having this conversation a lot lately where the term "Balanced Market" is used in place of an "Average Market." A balanced market occurs where the rate of appreciation matched the rate of inflation which occurs historically around a 6 month supply of inventory. An average market in Denver would be the average historical months supply of inventory over the last 15 years would be closer to a 3 to 3.5 month supply. Overall we are still sitting at about 1.3 months worth of inventory, indicating we are sitting at 22.2% of a balanced market. For a market in balance we would need to have around 30,000 available listings for sale vs. an average market we would need to have 15,000 homes for sale. Balanced market vs. average market are not the same thing.
Based on properties that went under contract last week we saw that 45.6% of them had at least 1 price reduction and the size of the price reduction jumped from -6.1% last week to -6.5% this week or just under a $50,000 price reduction based on an average priced home. If you are using comps from spring, we are off peak pricing between 5-7%.
